And Now, A Word From Our Sponsors: How Video Ads Will Impact Facebook

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ADOTAS — When Instagram (bought by Facebook for $1 billion in April 2012) announced earlier this year that it was allowing its users not only to take and upload static images, but also to create 15-second videos through the app, several commentators immediately mooted that the same format might find its way into Facebook’s advertising engine. Further, when Instagram more recently announced that users (including brands) could upload videos that had been created earlier – and not necessarily on a mobile device – this again fueled speculation that the increase in quality would be attractive to potential advertisers.

Recent tests by Facebook validate the rumors, and details from people “close to Facebook” have already given marketers a good idea of what we can expect from video advertising on the social network:

  • Video ads will be in the style of TV commercials.
  • They will be 15 seconds long.
  • Ad prices will be between $1 million to 2.5 million per day.
  • Ad units will only be sold on a per-day basis.
  • Targeted users will be exposed to the ads a maximum of three times per day.
  • Ads can only be targeted based on age and gender.
  • Videos ads will auto-play on mobile but not on Facebook’s desktop version.

The specifications of the ads (which have yet to be confirmed) may seem surprising to those familiar with Facebook’s existing advertising model, and there are likely to be stakeholders who feel the impact of this anticipated announcement.

The cost of up to $2.5 million per day is likely to remove video ads as an option for all but the biggest advertisers. This is a missed opportunity, and you should expect to see it change quickly (in the same way that Twitter’s promoted tweets rapidly fell in price from $100,000 per day to a self-serve model).  Traditional Facebook advertising opened up a great opportunity for companies to reach highly targeted, global audiences for as much or as little budget as they had available. With the cost of video production having fallen so dramatically, it is plausible  that the cost of video advertising media will do the same.

This isn’t to say larger businesses will take to Facebook video ads like a moth to a flame. While big-budget social media innovators such as Coca-Cola and Nike might be turned on by video ads, other organizations are likely to question whether there is real value in such a significant investment. The broad targeting based only on age and gender means brands will reach high numbers of Facebook users, many of whom will be out of the target audience, meaning valuable marketing dollars may be wasted.

Clearly the other important group to consider here are the people being advertised to: Facebook’s army of over 1 billion users. These people happily share the intimate details of their daily lives, creating a mass of data that makes Facebook such an attractive advertising platform. It also forces Facebook to find a balance between a positive user experience and the ability to present targeted ads – something the company navigates every day, to varying degrees of success. In fact during the recent Dmexco conference, Facebook’s Director of Engineering, Andrew Bosworth, called upon advertisers to focus on quality content for their ads, demonstrating an awareness that weak content will turn off Facebook users.

Many Facebook users already disregard the site’s ads, finding them intrusive and annoying, so it’s unlikely they’ll embrace video ads with open arms. This will be particularly important on mobile devices, where it is rumored video ads will automatically play when a user pauses on them. Not only does this present a potential irritation to users, but could also have an impact on advertising costs.

While Facebook’s broad targeting of its video ads also reflects the wide audience TV commercials reach – and might be the justification for the high cost – it could devalue Facebook’s other ad offerings. A recent study by Socialbakers found that 51 percent of brands prefer to use Facebook advertising over the ad offerings of rival networks, largely because the tight targeting controls allow marketers to drill down into the audience and reach users based on specifics such as interests and location. This ensures the people exposed to ads are well within the desired audience, and helps justify the marketing spend. Not having the option could turn advertisers off.

Additionally Facebook’s current static ad model allows marketers to pay for ads on a cost-per-click basis, meaning brands only pay when a user clicks on the ad, rather than for every ad impression received. Brands can also specify their maximum campaign budget, which can be very low. The inability for brands to do this with video ads may deter them from investing: why spend $2.5 million on an ad when the majority of people seeing it may not be interested?

Video ads in the style of TV commercials are an interesting way for Facebook to approach video advertising. With the launch of Instagram video, some may argue that allowing marketers to use Instagram videos for Facebook ads would have been a more logical approach. It would drive down production costs, provide a link between the platforms, and make for some really creative content. This may be part of the reason Instagram is allowing users to upload videos created ‘off-mobile;’ brand videos created for Instagram could easily be re-used as Facebook video ads.

Video ads in social networks could also tap into the trend for second-screen viewing. When consumers watch their favorite TV shows, breaking news or live sports events, their discussion of these on social networks (highlighted through searchable hashtags) could present the opportunity to deliver context-specific video advertising. Powerful stuff.

Ultimately, video advertising on Facebook makes sense. Users are familiar with consuming video content online, and increasingly want to do so in bite-sized chunks. The challenge for brands will be to ensure that their video ads are compelling, entertaining and informative. The social mantra of “Why will they care and why will they share?” still holds true. And the challenge for Facebook will be to makes sure that users don’t feel the platform becomes one long commercial break.

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